CITATION: True North Nutrition Ltd. v. BioSteel Sports Nutrition Inc., 2017 ONSC 5654

COURT FILE NO.: CV-16-00561292

MOTION HEARD: 20170921

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: True North Nutrition Ltd., Plaintiff

AND:

BioSteel Sports Nutrition Inc. and Marcello Peter Curcio a.k.a. Marc Curcio, Defendants

BEFORE: Master B. McAfee

COUNSEL: A. Worone, Counsel for the Plaintiff A. Matheson and L. Stanic, Counsel for the Defendants and Proposed Defendant John Celenza

HEARD: September 21, 2017

REASONS FOR DECISION

[1] There are two motions before me. The plaintiff True North Nutrition Ltd. (True North) brings a motion for leave to amend the statement of claim and for an order prohibiting and restraining McCarthy Tétrault LLP (McCarthys) from acting for the proposed defendant John Celenza (Celenza). The defendants BioSteel Sports Nutrition Inc. (BioSteel) and Marcello Peter Curcio a.k.a. Marc Curcio (Curcio) (collectively the defendants) bring a motion for an order that the action be case managed and, in the alternative, for a timetable.

True North’s Motion

Leave to Amend

[2] The defendants and Celenza do not oppose the granting of leave with respect to certain amendments. The contested proposed amendments are the words “secret commissions” at paragraph 1(c) and 2A(b), the words “and intentional interference in True North’s economic and contractual relations” at paragraph 3(a), the words “obtain secret commissions or payments” at paragraph 13(e), paragraph 31D, and the words “and duty not to offer or accept secret commissions” at paragraph 40A.

[3] The defendants and Celenza oppose the contested proposed amendments on the basis that the pleading does not contain full particulars and, with respect to the proposed amendments concerning intentional interference with economic and contractual relations, also oppose these amendments on the basis that the essential elements of this cause of action have not been pleaded.

[4] The parties agree that the nature of the contested proposed amendments are such that full particulars are required in accordance with Rule 25.06(8) of the Rules of Civil Procedure which provides as follows:

Where fraud, misrepresentation, breach of trust, malice or intent is alleged, the pleading shall contain full particulars, but knowledge may be alleged as a fact without pleading the circumstances from which it is to be inferred.

[5] With respect to the contested proposed amendments at paragraphs 1(c), 2A(b), 13(e) and 40A, True North submits that full particulars of the secret commissions are provided at paragraphs 21, 32, 35 and 38(c) of the proposed amended statement of claim and that the secret commissions are the higher rate of remuneration.

[6] I have reviewed the pleadings listed by True North. Full particulars of the secret commissions have not been provided. It is not clear from the pleadings that the secret commissions are the higher rate of remuneration or salary. Full particulars of who paid the secret commissions, to whom, when and for what purposes have not been provided. I decline to grant leave to amend with respect to the secret commissions without prejudice to True North seeking leave for such amendments with full particulars.

[7] With respect to the proposed amendments at paragraphs 3(a) and 31D, True North submits that full particulars have been provided and that the essential elements intentional interference with True North’s economic and contractual relations are provided at paragraphs 31A, 31B, 20, 22, 26(b), 27, 30 and 31D.

[8] The tort of intentional interference in economic relations is made out when the defendant intentionally causes economic injury to the plaintiff by unlawful means against a third party, which means would be actionable by that third party. Intentionality is an essential element of the tort:

Intentional interference with economic relations requires that the defendant intend to cause loss to the plaintiff … If the loss suffered by the plaintiff is merely a foreseeable consequence of the defendant’s actions, that is not enough (A.I Enterprises Ltd. v. Bram Enterprises Ltd., 2014 SCC 12 at para. 43 and at para. 96, citing Goudge J.A. in Alleslev-Krofchak v. Valcom Ltd., 2010 ONCA 557 at para. 50).

[9] I have reviewed the pleadings listed by True North. An unlawful act against a third party, actionable by that third party has not been pleaded. An intention to cause economic loss has not been pleaded.

[10] The elements of the tort of intentional interference have not been pleaded, nor have full particulars of the allegations at paragraph 31D, which also include allegations of misrepresentation and deceit, been pleaded. I decline to grant leave with respect to the contested proposed amendments at paragraphs 3a and 31D, without prejudice to True North seeking leave to amend with the elements of the tort and full particulars provided.

Prohibiting and Restraining McCarthys from acting for Celenza

[11] There is no evidence filed by True North in support of this relief. On the motion, True North argued that based on the pleadings and in particular the pleadings at paragraph 31C, 31D, 40A and 40B of the proposed amended statement of claim, there would be a clear conflict of interest if the same counsel acted for Celenza and the defendants.

[12] Leave has not been granted with respect to the proposed amended pleading at paragraph 31D, without prejudice. Even if leave was granted with respect to all proposed amendments relied upon, I would decline to grant the relief sought.

[13] Litigants may only be deprived of their choice of counsel if a fair minded and reasonably informed member of the public would conclude that the proper administration of justice compels disqualification (Mallory v. Werkmann Estate, 2015 ONCA 71 at para. 28).

[14] The standard set by this test is high. The decision to disqualify is a discretionary one, to be made only in the clearest of cases (MacRae v. Santa, 2002 CanLII 18620 (ON SC), [2002] O.J. No. 4231 at paras. 29-32, Chapman v. 3M Canada Inc., 1995 CanLII 7128 (ON SC), [1995] O.J. No. 2628 at para. 20).

[15] Hypothetical future conflicts between defendants cannot form a ground for denying defendants their choice of counsel when the defendants deny such a conflict (T.S. Publishing Group Inc. v. Shokar, 2013 ONSC 1755, paras. 94(vi) and (ix), Chapman at para. 22).

[16] It is inappropriate for True North to seek to interfere in the decision of the defendants and Celenza to retain common counsel absent “clear and cogent” evidence of a conflict, which has not been provided (Krede Marketing International Inc. v. Micacchi, [2008] O.J. No. 4886 at para. 10, Chapters Inc. v. Davies, Ward & Beck LLP, 2001 CanLII 24189 (ON CA), [2001] O.J. No. 206, at para. 29).

[17] True North relies on the decision of the Alberta Court of Queen’s Bench in King v. Arnett, 2006 ABQB 639 in support of its position that evidence is not required on this motion. King was an oppression case which is different from the type of case before me on this motion. In any event, in King there was evidence before the court to support the allegations contained in the pleadings.

[18] This is not the clearest of cases. The limited material before me does not satisfy that a fair minded and reasonably informed member of the public would conclude that the proper administration of justice compels the order sought. I decline to grant the relief sought.

BioSteel’s Motion

[19] Deadlines were sought for the steps set out below.

[20] The parties agree that the second amended statement of defence and counterclaim shall be served by October 2, 2017. I am extending that agreed upon deadline to October 10, 2017, for two reasons. First, I have not granted all of the amendments sought which will necessitate the preparation of an amended statement of claim in a form that is differs from the current proposed amended pleading. Second, this decision has been under reserve for approximately one week.

[21] The parties do not agree to the balance of the timetable.

[22] True North seeks a deadline of October 19, 2017, for delivery of a second amended reply and defence to counterclaim. The defendants seek a deadline of 6 days earlier, October 13, 2017. I am ordering True North’s deadline, plus one week for the reasons outlined above. The deadline shall be October 26, 2017.

[23] True North seeks a deadline of November 6, 2017, for service of affidavit of documents. The defendants seek a deadline of October 16, 2017. I am ordering True North’s deadline plus one week for the reasons outlined above. The deadline shall be November 13, 2017.

[24] True North seeks a deadline of November 30, 2017, for examinations for discovery to take place. The defendants seek an order that examinations for discovery take place during the week of October 30, 3017, or the week of November 6, 2017. I am ordering True North’s deadline plus one week for the reasons outlined above. The deadline shall be December 7, 2017.

[25] A deadline for service of the amended statement of claim was not requested. The statement of claim will need to be amended in accordance with the leave which I have granted, and will need to be served before the second amended statement of defence and counterclaim is served. I am ordering a deadline of October 4, 2017, for service of the amended statement of claim.

[26] I am not satisfied that case management is warranted. The deadlines proposed by both sides were very close. In my view the parties ought to have made further efforts to agree to a timetable. A timetable has now been ordered for the progress of the action.

Costs of the Motions

[27] The issue of costs of the motions was argued on a global basis. If successful on the motions, True North seeks substantial indemnity costs in the all-inclusive sum of $25,000.00. If successful on the motions, the defendants and Celenza seek substantial indemnity costs in the all-inclusive sum of $30,000.00.

[28] True North’s motion was booked and confirmed for 1 hour. The defendants’ motion for case management and timetabling was booked for 10 minutes. No cross-examinations took place. True North did not file a factum or brief of authorities but “walked in” four cases. Most of the argument was focused on the representation issue.

[29] The defendants and Celenza were successful on the issue of representation. The contested amendments were not permitted, but on a without prejudice basis. Case management was not ordered. A timetable was ordered preferring the deadlines requested by True North.

[30] The defendants and Celenza were more successful than True North on the motions. I am not satisfied that there was conduct on the part of True North to warrant substantial indemnity costs. In my view, the all-inclusive sum of $10,000.00 is a fair and reasonable amount that True North could expect to pay for costs in all of the circumstances.

[31] Order to go as follows:

1. On an unopposed basis, leave is granted to amend the statement of claim in the form of the proposed amended statement of claim at tab 1A of the motion record of the plaintiff save for the amendments to plead the words “secret commissions” at paragraph 1(c) and 2A(b), the words “and intentional interference in True North’s economic and contractual relations” at paragraph 3(a), the words “obtain secret commissions or payments” at paragraph 13(e), paragraph 31D, and the words “and duty not to offer or accept secret commissions” at paragraph 40A.

2. Leave to amend the statement of claim in the form of the proposed amended statement of claim at tab 1A of the motion record of the plaintiff to plead the words “secret commissions” at paragraph 1(c) and 2A(b), the words “and intentional interference in True North’s economic and contractual relations” at paragraph 3(a), the words “obtain secret commissions or payments” at paragraph 13(e), paragraph 31D, and the words “and duty not to offer or accept secret commissions” at paragraph 40A, is denied, without prejudice.

3. The motion for an order prohibiting and restraining McCarthys from acting for Celenza is dismissed.

4. The motion for an order that this action be assigned to case management is dismissed.

5. The parties shall adhere to the following timetable:

(a) The amended statement of claim shall be served on or before October 4, 2017;

(b) The second amended statement of defence and counterclaim shall be served on or before October 10, 2017;

(c) The second amended reply and defence to counterclaim shall be served on or before October 26, 2017;

(d) Affidavits of documents shall be served on or before November 13, 2017; and

(e) Examinations for discovery shall take place on or before December 7, 2017.

6. Costs of the motions are fixed in the all-inclusive sum of $10,000.00 payable by the plaintiff to the defendants within 30 days.

Master B. McAfee

Date: September 27, 2017